All Forum Posts by: Robert Sepulveda

Hello @Mira Ramesh Babu

You can get prequalification letters from many places for rehab money. You simply fill out an application, provide a bank statement to show you have downpayment and rehab money and have your credit pulled. You'll have to provide a bio of your rehab experience or any real estate experience in some cases.

That's pretty fast and easy.

Once you have an approved offer, you send the offer in and your agent will contact escrow and get everything worked out to close you loan.

Terms are usually based on the future repaired value of you house. You can get between 65%to 75% of that future value. Which could include up to 90% of your purchase price and up to 100 % of your rehab costs in many cases as long as you stay under that percentage of future value. Typically your first deals don't get the best of available terms and you'll need to come out of pocket more than a seasoned investor, but there are plenty of programs in your area.

let me know if you need more specifics. You can contact me directly.

@Account Closed apply that knowledge now!

The problem with those types of markets is, everyone with a pulse and a $99 investment class under their belt thinks they're an investor. All they had to do was buy a property, hold it for 6 months and make $30 to $150k on appreciation.

It's tough to replicate that market. But, there are deals to be had now. Apply your knowledge and skill to this market and you'll make money. Apply it to a down market and you'll make more money. Just watch affordability indexes in the markets you're in. When they get below 20%, be careful and start hording cash. When they get close to 16 to 17%, prepare for a market correction in that market. Once equity starts to reverse, buy and hold. Just one strategy, but don't let any market keep you out if you're skilled enough to work it. Go for it.

Just to be clear - on @Account Closed comments of mortgages being sold all the time. The 08 mortgage crisis happened because bonds containing mortgages were sold en-masse all over the globe. And because they sold so well, and investment banks wanted to capitalize, they created derivatives of these bonds that were based on the original success of the bonds that actually had mortgages in it. But they were just mathematical speculations on the success of mortgage bonds as a whole. The bonds that were derivatives of real mortgage bonds had nothing in them but junk, if anything at all (called CDOs - derivative vs CMOs - real collateral)

We can't confuse the mortgage bonding and selling that goes on now with what happened from 01-07. We have to be clear so that good debt and good bonding practices don't get lumped in with derivative crap that has not been allowed to continue as of yet. Let's hope that never does happen again.

It's easy for lenders to find out later for any future sale of your note that you've move the title into a trust or LLC. It never triggers anything. Your risk is higher that, if there's an actual due on sale clause in your note or deed, and you put the property in an individual name, you could trigger the clause. Stick with a trust or LLC, wait out your 90 days, and you'll be in the 99.99% that never get their loan called on when payments are made ontime.

If you you want to message me the city, and the basic numbers, I can help place that for you. There's a portfolio that should fit the bill for you.

People move title in and out of trusts and LLC's all the time. Not all lenders will lend to an LLC or trust so, they'll require you move to your name prior to the close of the new loan. It works in reverse as well. Lenders are the ones that require the title transfer most of the time, so they can't stop you from forming a legal entity and pledging your asset into it.

I've been the one to have to ask investors to move their properties in and out of trusts and LLCs before. The key is not to buy a property and move title quickly. I'd wait 90 days or so, so that if your loan is sold, the underwriting review it will receive shows the title to remain the same as it was when the loan closed.

Love how @Account Closed said the mythical beast! the truth is, no one reads their documents. Read your note and trust deed. Most don't even have that clause. Though it varies by municipality.

Yes, that's a good, creative means as long as it's for a non-owner occupied property. You can take a "delayed financing" program to accomplish this. You'll usually be capped out at about 70-75% of your equity to be able to refinance though. But if you bought at a discount, that could end up being higher than what you paid for it.

You can also deposit the cash from the line of credit into you bank account and season it for 2 months, then use it with a conventional loan to buy your property. Then you're only using the credit line for the original 25 to 30 % downpayment.

Expect higher rates, but much quicker funding with less documentation requirements.

8-12% interest is common.

6 month to 18 month terms usually

interest only payments

Some will fund a portion of your rehab if your deal can support it (ie. you got a great deal and the finished value of the property makes sense)

expect 2 to 5 % points in fees for the loan.

Most can fund in 10 to 20 days vs 45 days avg for a conventional loan. It's usually better to stick with local sources for this type of funding so that they understand your market and move quicker. They can also provide insight to your market for you.

Good Luck.

If it's in one of the major metropolitan service areas, you should be good if you can get an owner carry to cover your balance. There are portfolio loan programs that allow higher cap rates as long as it's within the average for the area and the dscr is 1.2 to 1.25 or better.

If the property can support the debt, there's financing to be had. 

Don't want to claim this is tax advice - you should speak to a lawyer about it. But like @Roman M. says, it's usually not an issue as long as payments are maid on time and in full until you naturally sell or refinance.

As long as your relatives don't claim the interest writeoff anymore (as they shouldn't) and you keep records proving you are the one making payments, you can claim the tax deductions on schedule E.

Other pitfalls: you don't get the credit score benefits of making ontime payments. Your relatives are trusting you don't have lates or defaults and it reduces the amount of house they can afford on the house they move into next because that debt is still under their name.

If you take care of those issues, you're good to go. If you've got someone willing to do it, that's more than half the battle.

You refinance after 6 months of proof, you've been making payments to get the debt in your name and start receiving  benefits to your credit score. As well as recoup your cash you gave for their equity.

Good luck.